Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention, and I wouldn't underestimate the value of that. But they're not designed to take care of social needs.
Interpretation
Markets prioritize individual profit, which can neglect social welfare.
George Soros emphasizes that while markets are effective in promoting individual interests and profits, they inherently fail to address broader social needs. He highlights the importance of recognizing the limitations of markets in fulfilling societal responsibilities.
In practice
In a discussion about economic policy, you might use this quote to illustrate the limitations of a purely market-driven approach.
The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.
The collapse of the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easier to imagine than the continuation of the present regime.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
We are the most powerful nation on earth. No external power, no terrorist organization can defeat us. But we can defeat ourselves by getting caught in a quagmire.
My foundations support people in the country who care about an open society. It's their work that I'm supporting. So it's not me doing it. But I can empower them. I can support them, and I can help them.
The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.
How very popular to say, 'spend more on this, expend more on that.' And of course, we all have our favorite causes; I know I do. But someone has to add up the figures. Every business has to do it, every housewife has to do it, [and] every government should do it.
We ask our companies to restructure; we ask employees to work more for less money because there is overproduction, but then we're unable to defend them from cheaper Chinese imports. We are insane.
This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
The public firm can nowhere maintain itself in free competition with the private firm; it is possible today only where it has a monopoly that excludes competition. Even that alone is evidence of its lesser economic productivity.
Some people say we have this inequality because some people have been contributing much more to our society, and so it's fair that they get more. But then you look at the people who are at the top, and you realize they're not the people who have transformed our economy, our society.
Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.
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